Korea Investment & Securities has maintained its "overweight" recommendation on the securities sector, which has recently seen a rise in share prices, and selected Kiwoom Securities as its "top pick."
On May 13, Baek Doosan, a researcher at Korea Investment & Securities, stated in a report titled "Securities - Thoughts on Recent Share Price Rises," "Despite the somewhat sharp increase in share prices, the four securities firms under our coverage are expected to post a return on equity (ROE) of 10.1% in 2025, while the price-to-book ratio (PBR) remains at only 0.59."
Based on the previous day's closing price, the KRX Securities Index rose by 22.4% compared to the end of the previous quarter. This is 17.3 percentage points higher than the KOSPI's increase over the same period. Baek explained, "Compared to April 9, when concerns over mutual tariffs were high, the KRX Securities Index has risen by 34.7%. This is the result of strong first-quarter earnings that have already been announced, growing expectations for annual performance in 2025, and the widespread highlighting of potential policy benefits."
In particular, Baek pointed out that three investment points for the securities sector remain valid: solid bond management performance, improved domestic stock brokerage results, and expansion of corporate finance through new businesses such as issuance notes and integrated investment accounts (IMA). He added, "There is further upside potential as global geopolitical risks and domestic political uncertainties are resolved. In particular, both ruling and opposition parties have shown stock market-friendly policy moves, such as the separation of dividend income taxation, through presidential election pledges announced on the 12th and individual legislative proposals."
He also cited the strengthening of corporate finance as a common theme across party lines, stating, "As early as the end of the year, new players in issuance notes and IMA businesses are expected to emerge." He projected annual profits of 130 billion won for Samsung Securities and 93 billion won for Kiwoom Securities once these businesses are fully operational. He continued, "Our top pick in the securities sector is Kiwoom Securities. Despite concerns over the supply and demand of 400 billion won in redeemable convertible preferred shares (RCPS) (with a conversion price of 150,417 won per share), we should focus more on the profit momentum driven by capital market activation and new business expansion."
The target prices presented by Korea Investment & Securities for Mirae Asset Securities, NH Investment & Securities, Samsung Securities, and Kiwoom Securities are 14,000 won (buy), 18,000 won (buy), 65,000 won (buy), and 185,000 won (buy), respectively.
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